16.02.2025, 13:04
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How to Calculate ROI in Dubai Real Estate: A 10-Year Investment Model

Dubai’s property market is one of the few globally that offers a blend of high rental yields, long-term capital appreciation, and a tax-free environment. For international investors, a 10-year horizon can be ideal for maximizing total returns. This guide walks through how to calculate ROI based on both annual rental income and expected resale value, using a practical investment scenario in Dubai Hills Estate.

Step 1: Set the Investment Parameters
Let’s assume the investor purchases a 1-bedroom apartment in Dubai Hills Estate in 2025 for $550,000 USD.

  • Annual rental yield: 6.5%

  • Annual rental income: $35,750

  • Annual capital appreciation: 4%

  • Holding period: 10 years

  • Annual ownership costs (service charges, maintenance): $5,000

  • Exit transaction costs (commissions, fees): 5% of final property value

Step 2: Calculate Total Rental Income
Over 10 years:

  • Gross rental income = $35,750 × 10 = $357,500

  • Ownership expenses = $5,000 × 10 = $50,000

  • Net rental income = $357,500 – $50,000 = $307,500

Step 3: Estimate Future Property Value
Assuming 4% annual growth:

  • Future property value =
    $550,000 × (1.04)^10 ≈ $814,200

  • Capital gain = $814,200 – $550,000 = $264,200

  • Exit costs (5% of $814,200) = $40,710

  • Net capital gain = $264,200 – $40,710 = $223,490

Step 4: Total ROI Over 10 Years

  • Combined ROI = $307,500 (rental income) + $223,490 (capital gain) = $530,990

  • Total return on investment = $530,990 ÷ $550,000 ≈ 96.5%

  • Average annual ROI ≈ 9.65%

Conclusion
This 10-year model in Dubai Hills Estate shows how investors can nearly double their capital through a balanced strategy of rental returns and value growth. With Dubai offering strong market fundamentals, zero property tax, and investor-friendly policies, real estate remains a prime vehicle for long-term wealth accumulation.

While outcomes vary by community, asset type, and market cycles, areas like Dubai Hills Estate offer a unique mix of lifestyle appeal and investment performance.